Leaving a Legacy Through Testamentary Gifts

Estate planning is more than an opportunity to pass assets to loved ones; it is also a way
to leave a lasting impact on the causes that matter to you. One way to do this is through testamentary gifts, which are charitable donations specified in your will or trust and distributed after your passing. These gifts allow you to support nonprofits, religious organizations, educational institutions, or other charitable causes as part of your estate plan, ensuring your legacy reflects your values.

What Are Testamentary Gifts?

Testamentary gifts are assets designated in a will or trust to be given to specific beneficiaries after death. These gifts must go through probate before they are distributed if they are given in the form of a Last Will and Testament. They can take various forms, including:

• A defined asset or sum of money given to a beneficiary (e.g., “I leave $50,000 to XYZ Charity”).
• The remaining assets of an estate, after all debts and expenses are paid, given to one or more beneficiaries (e.g., “I leave 25% of my residuary estate to ABC Foundation”).
• A percentage of the total estate left to a charitable organization (e.g., “I leave 10% of my estate to my alma mater”).

Why Consider Charitable Testamentary Gifts?

Incorporating charitable giving into your estate plan offers several benefits:

• Supporting a Cause You Believe In – A testamentary gift ensures continued support for the missions and values that matter most to you.
• Potential Estate Tax Benefits – Charitable gifts may reduce the taxable value of your estate, potentially lowering estate tax liabilities.
• Preserving Family Harmony – Directing a portion of your estate to charity can help balance bequests among family members while reinforcing a philanthropic legacy.
• Flexibility – Unlike lifetime charitable gifts, testamentary gifts allow you to retain control of your assets during your lifetime while ensuring they are distributed according to your wishes after your passing.

Ways to Incorporate Charitable Giving in Your Estate Plan

There are several methods to include charitable giving in an estate plan, depending on your financial goals and desired impact:

1. The simplest way to leave a charitable gift is by naming an organization in your will or trust as a beneficiary of a specific, residuary, or percentage-based gift.
2. A Charitable Remainder Trust provides income to beneficiaries for a set period, with the remaining assets going to a charity upon termination of the trust.
3. A Charitable Lead Trust provides income to a charity for a set period, with the remaining assets eventually passing to beneficiaries, often with tax advantages.
4. Beneficiary Designations – Naming a charity as a beneficiary of a life insurance policy, retirement account (such as an IRA or 401(k)), or brokerage account allows for a simple transfer without going through probate.

If you are considering incorporating charitable giving into your estate plan, Wilson Law can help you explore the best strategies for achieving your philanthropic and financial goals. To get started, call us at 866.603.5976 or fill out our online form and we will be in touch to schedule an appointment at your convenience.